How Pfizer’s Antibiotics Buy from AstraZeneca PLC Will Affect Jobs in the U.S.

After yesterday’s announcement that Pfizer is acquiring UK-based AstraZeneca (AZN)’s antibiotics business for more than $1.5 billion, the impact on U.S.-based AstraZeneca workers is being evaluated.

AstraZeneca currently has about 2,100 staffers in Delaware spread across a packaging facility in Newark and the Fairfax campus. There are also a much lower number of employees at AstraZeneca facilities in Boston and Gaithersburg, Maryland, who are involved in the antibiotics operations.

AstraZeneca spokeswoman Abigail Bozarth told Delaware Online that the deal will have an effect on those workers, although she declined to provide details. She did indicate that they will not be transferred to Pfizer, although she did not say whether they would be laid off.

It is unknown how many staffers will be affected, although Bozarth did say they were in the single digits. And apparently the Newark plant will not be affected.

Pfizer is acquiring the rights to commercialize and develop AstraZeneca’s late-stage small molecule antibiotics business in most global markets outside the U.S. That includes already approved antibiotics Merrem, Zinforo and Zavicefta, and two more currently in clinical development, ATM-AVI and CXL.
Dublin-based Allergan controls the North American rights to four of the drugs. Pfizer is acquiring the North American rights to Merem. Pfizer had plans to acquire Allergan this year, but that merger deal collapsed after the U.S. Treasury Department installed new rules affecting tax inversions. That deal was priced at $160 billion.

Pfizer is paying AstraZeneca $550 million at the close of the deal, and another $175 million in January 2019. Pfizer may pay up to $250 million in commercial, manufacturing and regulatory milestones. In addition, it may pay up to $600 million in sales-related payments in addition to recurring, double-digit royalties on future sales of Zaficefta and ATM-AVI in specific markets.

The deal does not include AstraZeneca’s biological anti-infective drugs portfolio or Entasis Therapeutics, last year’s spinout of its early-stage antibiotic development business.

“As we continue to reshape our Essential Health portfolio, we are focusing on areas that further address global public health needs and that complement our core capabilities and experience in therapeutic areas, including anti-infectives,” said John Young, group president for Pfizer Essential Health, in a statement. “We are committed to looking for ways to enhance our portfolio around the world where we offer patients and healthcare professionals access to more than 60 anti-infective and anti-fungal medicines.”

In July, in its second-quarter reporting, AstraZeneca cited a net loss of $3 million and a drop in earnings of 22 percent. The company indicated it was expected because its blockbuster cholesterol drug, Crestor, had come off patent and sales were dropping for it and others due to generic competition.

AstraZeneca’s other growth platforms include respiratory, cancer and diabetes medications. The growth platforms grew 8 percent compared to the second quarter of 2015, hitting $3.7 billion.

As a result of these losses, in addition to the sale of the antibiotics business to Pfizer, AstraZeneca has announced cost-cutting. In May the company indicated it planned to cut jobs in order to decrease the budget by $1 billion by the end of 2017. Specific sites were not announced. However, shortly after the company made that announcement, it terminated its relationship with 1,600 contractual sales representatives.